Chapter 6 · 7 levels
KPI design and dashboards
North star and guardrail metrics, denominators, time windows, seasonality and year-over-year comparisons, the averaging trap, and a monthly KPI sheet for Harbor & Pine's leadership team.
StartBy now you can compute every metric a store runs on. This chapter is about choosing them and defining them so they cannot mislead the people who read them every week.
A KPI is a number plus a definition: what is counted, divided by what, over which window, compared with which period. Change any of those four and the same data tells a different story. Harbor & Pine’s own numbers show it: a return rate that falls or rises depending on the denominator, an October that looks 39% down because it is half over, a November that is 66% up on October and 8% down on last November, and an average order value that drops by $68 when it is averaged the wrong way.
You start with the top of the sheet: one north star metric and the guardrails that stop it from being gamed. Then denominators, time windows, seasonality and year-over-year comparisons, two traps in quiz form, and a boss that builds the monthly KPI sheet the leadership team reads.
The house definitions from chapter 1 still hold: booked orders are completed or refunded, lines
need quantity > 0, net sales are after discounts, and net revenue is net sales minus refunds.
Levels
- One north star, a few guardrails
from Catherine Hale, Chief Executive Officer
north star metric, guardrail metrics, kpi design, goodhart
- Three return rates, one dataset
from Angela Rivera, Head of Customer Support
return rate, denominator, kpi definition, count distinct, filter clause
- Half a month is not a bad month
from Robert Kim, Chief Operating Officer
time window, month to date, trailing window, partial period, kpi definition
- November is always up
from Megan Collins, Head of Sales
yoy, mom, seasonality, lag, window functions, kpi definition
- Two AOVs from the same orders
from Laura Bennett, Head of Finance
aov, average of ratios, ratio of averages, weighting, metric traps
- December's suspiciously good return rate
from Priya Shah, Head of Data
kpi definition, data maturity, right censoring, return rate, partial period
- Boss: the monthly KPI sheet
from Catherine Hale, Chief Executive Officer
kpi sheet, net revenue, aov, return rate, conversion rate, yoy, guardrail metrics, data maturity